DLR - Embedded Expectations Analysis - 2018 9 19
Digital Realty Trust, Inc. (DLR:USA) DLR currently trades at historical highs relative to UAFRS-based (Uniform) Assets, with a 2.9x Uniform P/B. At these levels, markets are pricing in expectations for expanding profitability, but management has concerns about their strategies and ability to sustain recent outperformanceSpecifically, management may lack confidence in their 184-megawatt renewables portfolio, and in their ability to sustain strong performance in Europe. They may also lack confidence in their ability to provide more expansion options for customers, and in their strategy to keep contractors fully employed. Additionally, they may lack confidence in their ability to execute on their strategies, and to build inventory quickly when demand materializes. Moreover, they may lack confidence in the sustainability of record-high booking volume, renewal leasing activity, and positive portfolio occupancy absorption, particularly in Amsterdam and Frankfurt. Furthermore, they may be concerned about the development of their capabilities with IBM, and may lack confidence in their ability to sustain earnings growth. Finally, they may be concerned that the leases from their acquisition of DuPont Fabros will not renew in the coming quarters
Digital Realty Trust is a real estate investment trust. The company is a global provider of data center, colocation and interconnection solutions for customers across a variety of industry verticals ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare, and consumer products. The company's Operating Partnership, Digital Realty Trust, L.P., is the entity through which the company conducts its business of owning, acquiring, developing and operating data centers. The company's portfolio of data centers provides available environments for the exchange, processing and storage of electronic information.
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